U.S. Will Sue to Block Westinghouse-Swiss Ventures

The Justice Department said Monday that it will sue to block two proposed joint ventures between Westinghouse Electric Corp. and a Swiss company.

The ventures between Westinghouse and Asea Brown Boveri Inc. of Zurich, Switzerland, would involve the manufacture and sale of electric power generation, transmission and distribution products.

The announcement came just two weeks after U.S. Atty. Gen. Dick Thornburgh launched an effort to stem a “fear of an antitrust challenge.” Despite Thornburgh’s reference to such fears, the Reagan Administration over eight years has more often been criticized for failing to mount antitrust challenges.

“The proposed joint ventures pose significant threats to competition in equipment and services necessary for this country’s production of electric power,” said Charles F. Rule, assistant attorney general in charge of the antitrust division.

As a result, “the reduction of competition in these markets would likely mean higher electric rates for all users of electricity and higher prices for many products manufactured using electricity,” Rule said.

If the anti-competitive aspects can be resolved through a restructuring of the joint ventures, the antitrust division would still file a civil lawsuit, but it would be accompanied by a consent decree incorporating the changes that settle the suit, Rule said.

Rule said there was no contradiction between Thornburgh’s statement--which appeared Dec. 27 in a column in the Wall Street Journal--and the decision to try to block the proposed joint ventures between Westinghouse and the Swiss company.

Won’t Participate

In the column, Thornburgh said that foreign companies keep pace with competitive challenges “in part by entering into cooperative production ventures. U.S. firms generally have not done so--and one reason is the fear of an antitrust challenge. . . . The fear of a private antitrust suit seeking treble damages, as well as attorneys’ fees, is surely enough to inhibit many worthwhile ventures.”

Thornburgh recused himself from participation in the Westinghouse case, said Rule, who added that he did not know why this occurred. Justice Department spokeswoman Deborah Burstion-Wade said she could not immediately determine the reason.

“What this (the column) was designed to do was encourage pro-competitive joint ventures,” Rule said in a telephone interview from Paris, where he is attending a meeting of the competition law and policy committee of the Organization of Economic Cooperation and Development.

“Many joint ventures can help American consumers, and certainly if they don’t hurt consumers, there’s no antitrust role,” he said.

Negotiations Continue

“But there are times when conduct can raise concerns in the sense that it may harm the interests of American consumers and in those cases, the law obligates us, and it should, to take action to protect those consumers,” Rule said.

Westinghouse spokesman Jim Schmitt said “the negotiations are continuing that may enable the transactions to go forward.”

Under the joint ventures announced by Westinghouse in April, 1988, Westinghouse would hold 55% and ABB 45% in each partnership, Schmitt said.

“In both cases, each partner will contribute the manufacturing plants and engineering and marketing organizations of its involved operations,” he said. “In addition, Westinghouse will receive about $500 million from ABB for the two partnership interests.”

A Justice Department statement said the competitive concerns caused by one of the ventures focus on power transformers used by electric utilities to convert electricity to different voltages so that it can be transmitted efficiently over long distances. The combined power transformer sales of Westinghouse and ABB would exceed 50% of total U.S. sales, which were more than $400 million in 1988, the department said.

Major Suppliers

The concern with the second venture focused on the manufacture and sale of steam turbine generators and the sale of major repair services on existing turbine generating equipment, Rule said.

Westinghouse, ABB and General Electric Co. are the three leading U.S. suppliers of medium and large steam turbine generators.